Housing
Over the last few years, there was a run-up in housing prices that was unsustainable. We know that years of predatory lending practices in the subprime mortgage market, offered to borrowers with poor credit scores, have resulted in a record number of default payments, foreclosures and a steep downturn in the housing market. The housing bubble bursting has led to the worst housing market since the Great Depression and a financial crisis reverberating, not just in the United States but, across financial markets around the world. These challenges only underscore the need for Congress to act and protect American homeowners and our financial markets from more harm.
Last year, I worked with former Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and a bipartisan group of congressional leaders to build the consensus needed to pass the Housing and Economic Recovery Act of 2008. The bill was a vital step toward helping our housing economy on the road to recovery. This housing legislation modernized the Federal Housing Administration, giving millions of Americans access to safer, government-backed, fixed-rate loans. The bill also gave the Government Sponsored Enterprises (Fannie Mae, Freddie Mac, and the Federal Home Loan Banks) a strong, independent regulator to ensure their safety and soundness.
In addition, the recently enacted American Recovery and Reinvestment Act of 2009, or stimulus bill, provides an $8,000 first-time homebuyer refundable tax credit that does not have to be repaid to those who buy a home on or after Jan. 1, 2009, and before Dec. 1, 2009. The bill also provides $2 billion in additional funding for the Neighborhood Stabilization Program to help local communities revitalize neighborhoods devastated by foreclosures.
In March 2009, the Obama Administration unveiled the most comprehensive effort to date to address the prolonged contraction in our housing market: the Making Home Affordable program. The program allows homeowners who played by the rules access to more affordable fixed rate loans, while providing financial incentives for servicers and borrowers to modify mortgages to avoid foreclosure.
Also, the Federal Reserve plans to continue driving down the price of 30-year fixed rate mortgages to below 5 percent. The Fed's actions, coupled with the recently enacted $8,000 first-time homebuyer tax credit, as well as housing prices that are down by as much as 20-30 percent, may well combine to jump start the housing market later on this year.
Most importantly, safe and affordable housing is a central component of strong families. During this period of economic recession, I remain committed to enacting policies in Congress that strengthen the bonds of our communities, revitalize neighborhoods, and transform decaying sections of our state into the bustling communities our residents deserve.